Al-Mg alloy, as a kind of promising solid fuel applied in impact-initiated energetic materials, was fabricated by bi-direction rotation ball milling. Structure characterization reveals that the surface of Al0.8Mg0.2 granular particles exhibits a mass of nanostructure with size of 15-30 nm and the crystallite size decreases from more than 100 nm (raw Al) to 22.7 nm (Al0.8Mg0.2) after mechanical alloying. Thermal analysis indicates that Al0.8Mg0.2 presents excellent thermal reactivity. In the air, Al0.8Mg0.2 will be oxidized by O2 distinctly before melting. Moreover, the high temperature reaction of Al0.8Mg0.2-O2 is advanced by 33 °C compared with Al-O2 system. TG traces show that about 69.13% of Al0.8Mg0.2 are oxidized when the temperature increases to 1100 °C, but the value is merely 15.52% for raw Al. Using the alloy in thermites, other than Al-Fe2O3, Al0.8Mg0.2-Fe2O3 system presents a considerable solid-solid reaction. In addition, for Al0.8Mg0.2-Fe2O3, the average active energy of solid-solid reaction is lower by 331.664 kJ·mol-1 than that of the liquid-solid reaction, which means an advantage in ignition.